Game of catch-up for Nokia et al

Nokia needs to maintain its creativity and strategic thinking to ensure it doesn’t become another fallen giant Imagine motorbike manufacturer Yamaha made a car able to travel on a new network of roads that vehicles by Ford, General Motors and Fiat could not use. Imagine the established manufacturers dismissed the Yamaha project while still producing millions of cars that could not access this incredible road network.

Imagine customers of their premium cars now wanted a Yamaha, even though it was not as fast or feature-laden as their luxury saloons. Such is an analogy of how Apple changed the mobile ecosystem with its iPhone and Apps Store and transformed the humble handset into a device for life management. The latest chapter of the story tells how Apple established brand superiority over leviathans Nokia, LG, Motorola and Sony Ericsson, despite launching only one minimally-upgraded handset per year.

Seven years ago Motorola took the market by storm with the RAZR. Alas, the RAZR was a once-trick pony. Only now is Motorola attempting a serious comeback after three years in the wilderness of product development (by using a Google operating system).

LG has seen its mobile sales drop by more than a third. The company is basing its return to former glory on a new smartphone called Optimus with a 3D display. The Optimus 3D has the wow factor (I’ve seen it) but misses the point – the iPhone is successful because of its accessibility to thousands of applications. Besides, who really wants a battery-sucking 3D display on their phone just to play games?

Nokia’s problem

Nokia’s problem is even more acute. As we go to press rumours abound of a root and branch shake up of the business. It is easy to see where it all went so wrong for the Finnish giant. In 2007 Nokia splurged $8.1 billion on digital mapping company Navteq. The aim was to attract millions of buyers to its phones bundled with ‘free’ satellite navigation. Unfortunately, Nokia failed to anticipate Google would install free navigation on millions of iPhones and Android devices and that apps such as CoPilot would cost a few pounds.

A year later Nokia bought all the outstanding shares of Symbian for £208 million. But Symbian is steam-driven compared with the iPhone’s OS 4.2 and Google’s Android. Nokia’s big product launch of 2010 was the flagship N8, running Symbian 3.0. Much marketing ballyhoo was made of the N8’s 720p HD resolution video camera,HDMI connection, film editing software and Dolby surround sound. Yet the N8 was a sales flop. Customers who want to make movies will choose an 1080p HD camcorder, not a mobile phone.

The ability to download apps was run through Nokia’s own Ovi Store. This is like a corner newsagent competing against the Selfridges of the Apple App Store and Android’s applications store.
In September, Nokia hired Microsoft man Stephen Elop as its new boss. Elop’s appointment has now sparked rumours that Nokia will replace its own smartphone OS MeeGo with Windows Mobile 7. The phrase “deck chairs on the Titanic” springs to mind. Microsoft has yet to define its position in the mobile space. Its first iteration of Windows Mobile failed to achieve critical mass. Its attempt to launch its own mobile phone (called ‘Kin’ flopped). And Microsoft has yet to establish Windows Phone 7 OS as a viable alternative to Android and Apple.

The question now is will these hardware vendors who have lost credibility and market share ever retain their positions as prestige brands? Or will the‘new’ brands of HTC, RIM, and Apple prevail?

Strategic thinking

The saga of LG, Nokia, Motorola and Sony Ericsson shows what happens when brands lose creativity in their strategic thinking and its executives and directors are afflicted by a fatal mix of corporate arrogance and a failure to acknowledge paradigm shifts.

It is quite possible that these famous brands may never again dominate the mobile market as they once did. Some may disappear entirely.

Anyone doubting this possibility need only to examine the extinction from the mobile sector of NEC, Panasonic, and Mitsubishi. These leading global brands of the 1990s have now disappeared from the industry they once dominated.

If that doesn’t convince Nokia, LG and Sony Ericsson of the fragility of their position, perhaps the clever marketing types at these companies should familiarise themselves with the saga of Polaroid.

Here was a brand famous for instant photography. Polaroid had an opportunity to be synonymous with digital photography. Instead it concentrated on launching 35mm colour print film under the Polaroid brand. The lesson is clear for vendors who can only offer middle market and me-too handsets.